The Nagoya Kuala Lumpur Supplementary Protocol on Liability and Redress: Process, provisions and key issues for developing countries.
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1 Biosafety Briefing October 2011 TWN T h i r d W o r l d N e t w o r k The Nagoya Kuala Lumpur Supplementary Protocol on Liability and Redress: Process, provisions and key issues for developing countries By Lim Li Ching and Lim Li Lin Abstract The fifth meeting of the Parties to the Cartagena Protocol on Biosafety ended in Nagoya, Japan on 15 October 2010 with the adoption of a new environmental treaty, the Nagoya Kuala Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety. Developing countries wanted to have substantive rules on international liability and redress to address damage resulting from living modified organisms (LMOs) included in the Cartagena Protocol itself, but this proved too contentious to resolve at the time. The compromise, contained in Article 27 of the Cartagena Protocol, was to negotiate liability and redress rules at a later stage, after the entry into force of the This began in earnest in The negotiations of the Supplementary Protocol were difficult and were opposed by those with an interest in the production and export of LMOs. Developing countries and some developed countries, on the other hand, maintained that an international regime to deal with damage caused by LMOs was necessary because of the unique risks of LMOs and their transboundary nature, and in order to ensure that those responsible would be held liable. Most developing countries wanted a binding international regime that would establish substantive rules on civil liability, whereby victims of damage from LMOs can turn to national courts for redress. Instead, because of compromises made in the negotiations, the Supplementary Protocol takes an administrative approach, whereby response measures are required of the operator (person or entity in control of the LMO) or the competent authority, if the operator is unable to take response measures. This would cover situations where damage to biodiversity has already occurred, or when there is a sufficient likelihood that damage will result if timely response measures are not taken. The provision of response measures in the event of damage, or a sufficient likelihood of damage, resulting from LMOs is the central obligation of Parties to the Supplementary However, Parties can still provide for civil liability in their domestic law and the first review of the Supplementary Protocol (five years after its entry into force) will assess the effectiveness of its provision on civil liability. This could trigger further work on an international civil liability regime. Other contentious issues include that of financial security. In cases where damage does occur, a liability regime should ensure that financial resources are available to enable or compensate for necessary measures to redress the damage. The Supplementary Protocol merely retains Parties right to provide, in domestic law, for financial security. However, the provision on financial security mandates the first meeting of the Parties to the Supplementary Protocol to request the Secretariat to undertake further work on financial security. In addition, the first review of the Supplementary Protocol will include a review of the effectiveness of the provision on financial security. The Supplementary Protocol sets the minimum international standards on liability and redress for damage resulting from LMOs. Much has actually been left to Parties to determine and implement at the national level. Parties to the Supplementary Protocol are required to provide, in their domestic law, for rules and procedures that address damage. Thus, national legislation on liability and redress should implement and augment the Supplementary Introduction Liability is an obligation of a (natural or legal) person to provide compensation or take redress TWN Third World NETWORK is a network of groups and individuals involved in bringing about a greater articulation of the needs, aspirations and rights of the people in the Third World and in promoting a fair distribution of world resources and forms of development which are humane and are in harmony with nature. Address: 131, Jalan Macalister, Penang, MALAYSIA Tel: / Fax: twnet@po.jaring.my website:
2 measures for damage resulting from an action or a situation for which that person is deemed to be responsible under the applicable law. The purpose of liability rules can be four-fold; they have a (i) preventive function, in that they provide incentives for the implementation of and compliance with existing rules; (ii) absorptive function, by internalizing the environmental, health, socio-economic and other costs of an activity; (iii) punitive function, as they impose sanctions against wrongful conduct and help implement the polluter pays principle; and (iv) corrective function, that requires the restoration of the damage. 1 In relation to living modified organisms (LMOs), the issue of liability will only arise when there has been damage caused by LMOs. (The Cartagena Protocol on Biosafety uses the term living modified organisms for what are commonly known as genetically modified organisms, GMOs.) It must be established in fact and in law that the harm is directly attributed to the LMO (in particular its properties, their reproduction or modification) or the activity in relation to it. Further, it must be established that there is a person who can be identified as being responsible. Only then will the issue of compensating for the harm done arise. 2 The need for an LMO-specific liability regime (as opposed to merely using or adapting existing liability instruments) is underlined by the specific nature of LMOs and the potential damage they may cause. For example, once LMOs are released, the transgenes cannot be easily recalled or removed from the environment. There may also be possible long-term effects, whereby damage may only appear over time, or even increase incrementally over time. Furthermore, there are specific difficulties related to LMOs, such as in proving damage and causation, valuing areas of damage from LMOs (e.g., environmental or socio-economic) which are usually not as well 1 Secretariat of the Convention on Biological Diversity (2011). Liability and redress: Basic concepts. Workshop material no. 1. SCBD, Montreal. 2 Nijar, G.S. (2007). Liability and redress for damage arising from genetically modified organisms: Law and policy options for developing countries. In Lim L.C. and Traavik, T. (eds.), Biosafety First: Holistic approaches to risk and uncertainty in genetic engineering and genetically modified organisms. Tapir Academic Press, Trondheim. developed under existing liability regimes, and in defining the affected person(s) who can bring a claim, e.g., on behalf of the environment or affected communities. Many have argued that there is a need for an international regime on liability and redress because of the transboundary nature of LMOs, particularly their trade, the involvement of multinational companies in their development and production, and state responsibility/liability. This implies a need to clarify international law procedures, and for possible harmonization or minimum liability standards in countries. The process under the Cartagena Protocol on Biosafety Thus, during the negotiations of the Cartagena Protocol on Biosafety, the issue of liability and redress rules being developed and included in the Protocol was raised. This, however, proved too controversial to be resolved at the time, and as a compromise, it was agreed that such rules would be negotiated at a later date. As such, Article 27 of the Cartagena Protocol committed the Conference of the Parties serving as the meeting of the Parties to the Protocol (COP-MOP, the governing body of the Protocol) to adopt, at its first meeting, a process with respect to the appropriate elaboration of international rules and procedures in the field of liability and redress for damage resulting from transboundary movements of LMOs. The COP-MOP was to endeavour to complete this process within four years. Accordingly, at the first meeting of the COP- MOP in 2004, an Open-ended Ad Hoc Working Group of Legal and Technical Experts on Liability and Redress was established, and Terms of Reference and an indicative work plan agreed. In accordance with Article 27, the work was scheduled to end four years later, in Five meetings of the Working Group were held in May 2005, February 2006, February 2007, October 2007 and March However, the negotiations were difficult and were opposed by those with an interest in the production and export of LMOs. Parties failed to complete the process in 2008 as mandated, despite meeting 2
3 in a small group setting just before COP-MOP 4 and in a contact group during COP-MOP 4 in Bonn, Germany. Consequently, COP-MOP 4 renewed the mandate for further work and established a new format for the negotiations, in the form of a Group of the Friends of the Co-Chairs of the former Working Group, to continue the work on liability and redress. This Group met four times, in February 2009, February 2010, June 2010 and October It finally agreed to the text of the Nagoya Kuala Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on Biosafety, which was adopted on 15 October 2010 at COP-MOP 5 in Nagoya, Japan. The Supplementary Protocol is open for signature between 7 March 2011 and 6 March To date, there are 26 signatories to the Supplementary It will enter into force after 40 Parties to the Cartagena Protocol ratify it. Key elements of the Nagoya Kuala Lumpur Supplementary Protocol on Liability and Redress Nature and approach of the instrument Most developing countries wanted a binding international regime that would set substantive rules on civil liability, whereby victims of damage from GMOs can turn to national courts for redress. However, the issue of the nature of the regime, and whether the instrument or parts of it should be legally binding, became so contentious that negotiations almost collapsed in Bonn in The emergence of a group of Like-Minded Friends (around 80 developingcountry Parties and Norway, and including all of the Africa Group), however, pushed through a compromise agreement that the international instrument on liability and redress should have binding elements on civil liability. The package agreed to included an agreement that the international liability and redress regime would be legally binding and would comprise administrative approaches; and that while there would be no legally binding international civil liability rules and procedures, there would be a clause that would preserve the right of Parties to put in place domestic laws and policies on civil liability and redress which should include elements as stipulated in guidelines to be negotiated. The Bonn agreement was a heavily compromised proposal, given that most developing countries and Norway have been firmly behind a comprehensive and binding international civil liability regime, and had argued for this throughout the years of negotiations. Therefore, because of the compromises made, the Supplementary Protocol takes an administrative approach, whereby liability would be a matter to be resolved between the liable entity and the executive arm of a government, and response measures are required of the operator (person or entity in control of the LMO) or the competent authority, if the operator is unable to take response measures. The provision of response measures in the event of damage, or a sufficient likelihood of damage, resulting from LMOs is thus the central obligation of Parties to the Supplementary Definition of damage, scope, liable entity Damage is defined in the Supplementary Protocol as an adverse effect on the conservation and sustainable use of biological diversity, taking into account risks to human health. 3 A threshold applies, in that the damage has to be measurable or otherwise observable, and significant. An indicative list of factors that should be used to determine the significance of an adverse effect is included. 4 Once the threshold of significant damage has been met, the need for response measures arises. The Supplementary Protocol applies to damage resulting from LMOs that find their origin in a transboundary movement. The LMOs referred to are those (i) intended for direct use as food or feed, or for processing; (ii) destined for contained use; and (iii) intended for intentional introduction into the environment. 5 It also ap- 3 Paragraph 2(b) of Article 2 of the Supplementary 4 Paragraph 3 of Article 2 of the Supplementary 5 Paragraph 1 of Article 3 of the Supplementary 3
4 plies to damage resulting from unintentional transboundary movements and illegal transboundary movements. 6 Furthermore, domestic law implementing the Supplementary Protocol shall also apply to damage resulting from transboundary movements of LMOs from non-parties; 7 this is a critical issue as some of the major producers and developers of LMOs are non-parties to the Cartagena Protocol and hence cannot be Parties to the Supplementary Protocol, unless they first ratify the Cartagena The liable entity is identified in the Supplementary Protocol as the operator. This is defined as any person in direct or indirect control of the LMO. As appropriate, and as determined by national law, this could include, inter alia, the permit holder, person who placed the LMO on the market, developer, producer, notifier, exporter, importer, carrier or supplier. 8 Response measures The central obligation that Parties to the Supplementary Protocol assume is to provide for response measures in the event of damage, or a sufficient likelihood of damage, resulting from LMOs. Response measures are defined as reasonable actions to (i) prevent, minimize, contain, mitigate or otherwise avoid damage, as appropriate; and (ii) restore biological diversity. 9 Response measures must be implemented by, and in accordance with, domestic law. Response measures are required in both situations where damage to biodiversity has already occurred, and when there is a sufficient likelihood that damage will result if timely response measures are not taken. 10 If there is damage, the operator has obligations to immediately inform the competent authority, evaluate the damage 6 Paragraph 3 of Article 3 of the Supplementary 7 Paragraph 7 of Article 3 of the Supplementary 8 Paragraph 2(c) of Article 2 of the Supplementary 9 Paragraph 2(d) of Article 2 of the Supplementary 10 Paragraph 3 of Article 5 of the Supplementary and take appropriate response measures. 11 Meanwhile, the competent authority has to identify the operator responsible, evaluate the damage and determine which measures should be taken by the operator. 12 The competent authority may itself implement appropriate response measures, including when the operator has failed to do so. 13 It is understood that the operator is responsible for paying for the costs incurred in the exercise of its obligations under the Supplementary In addition, the competent authority has the right to recover from the operator the cost and expenses of, and incidental to, the evaluation of the damage and the implementation of response measures. 14 Some key issues for developing countries Civil liability The issue of civil liability proved to be one of the most contentious in the negotiations. As indicated earlier, most developing countries had actually envisioned that the international liability regime under the Cartagena Protocol would encompass substantive civil liability rules. Due to the compromises made during the course of the negotiations, the Supplementary Protocol contains only one legally binding clause on civil liability, which preserves Parties rights to put in place domestic civil liability rules and procedures. In the obligation to provide, in domestic law, for rules and procedures that address damage, Parties shall provide for response measures. Parties may also assess whether response measures are already addressed by their domestic civil liability law Paragraph 1 of Article 5 of the Supplementary 12 Paragraph 2 of Article 5 of the Supplementary 13 Paragraph 4 of Article 5 of the Supplementary 14 Paragraph 5 of Article 5 of the Supplementary 15 Paragraph 7 of Article 5 of the Supplementary 4
5 For damage to biodiversity, taking into account risks to human health, Parties may apply general existing civil liability rules and procedures, apply or develop specific civil liability rules and procedures, or apply or develop a combination of both. 16 This is an additional tier that Parties may turn to in order to seek redress, since the Supplementary Protocol already provides for an administrative approach to such damage. While the Supplementary Protocol per se does not cover traditional damage (which includes personal injury, loss or damage to property or economic interests), Parties are obliged to continue to apply existing general civil liability law, develop and apply or continue to apply specific civil liability law or develop and apply or continue to apply a combination of both, with regard to material or personal damage. 17 The scope of material or personal damage is qualified by requiring an association with damage as defined in the Supplementary Protocol, that is, damage to biodiversity, taking into account risks to human health. When developing new specific civil liability laws, rules and procedures to address damage caused by LMOs, Parties shall, inter alia, address damage, the standard of liability (including strict or fault-based liability), channelling of liability where appropriate and the right to bring claims. 18 In the course of negotiations after the Bonn session, the civil liability guidelines that were initially on the table were dropped. The first review of the Supplementary Protocol (five years after its entry into force) will assess the effectiveness of the provision on civil liability. 19 This may lead to further work on an international civil liability regime. Financial security In cases where damage does occur, a liability regime should ensure that financial resources are available to enable or compensate for necessary 16 Paragraph 1 of Article 12 of the Supplementary 17 Paragraph 2 of Article 12 of the Supplementary 18 Paragraph 3 of Article 12 of the Supplementary 19 Article 13 of the Supplementary measures to redress the damage. This issue was also very contentious, with some Parties opposing any mention of financial security, while others argued that without provision for financial security, the Supplementary Protocol would have placed obligations on importing Parties (which may have cost implications) without ensuring that the costs are borne by the person or entity concerned. In the end, the Supplementary Protocol merely retains Parties right to provide, in domestic law, for financial security. 20 This right has to be exercised in a manner consistent with the rights and obligations under international law. 21 However, the provision on financial security requires the first meeting of the Parties to the Supplementary Protocol to request the Secretariat to undertake a comprehensive study on financial security. 22 This study should address, inter alia, (i) the modalities of financial security mechanisms; (ii) an assessment of environmental, economic and social impacts of such mechanisms, in particular on developing countries; and (iii) an identification of the appropriate entities to provide financial security. The first review of the Supplementary Protocol, five years after entry into force, will also include a review of the effectiveness of the provision on financial security. 23 Furthermore, the Decision adopted at COP- MOP 5 on liability and redress states that where the costs of response measures have not been covered, such a situation may be addressed by additional and supplementary compensation measures. These may include arrangements to be addressed by the COP-MOP in the future. Products thereof Whether or not products thereof should be included in the scope of the Supplementary Protocol was very contentious. Some Parties 20 Paragraph 1 of Article 10 of the Supplementary 21 Paragraph 2 of Article 10 of the Supplementary 22 Paragraph 3 of Article 10 of the Supplementary 23 Article 13 of the Supplementary 5
6 argued that the Cartagena Protocol itself does not include products thereof in its scope. (The scope of the Cartagena Protocol is limited only to living modified organisms; however, the issue of products thereof is covered by the Cartagena Protocol with regard to information sharing, 24 and in information required in notifications for the advance informed agreement and simplified procedure, 25 as well as in the principles for risk assessment. 26 ) Others argued that the rationale for the inclusion of products thereof lies in their mention in the Cartagena Protocol in relation to risk assessment, which places them squarely within liability considerations as mandated by Article 27 of the Cartagena Protocol, for if that risk materializes then there must be provisions for liability and redress. Therefore the inclusion of products thereof would provide for a comprehensive and adequate instrument dealing with damage from LMOs. While mention of products thereof was eventually removed from the operative text of the Supplementary Protocol, the report of the fourth meeting of the Group of the Friends of the Co-Chairs records an understanding that Parties may apply the Supplementary Protocol to damage caused by processed materials that are of LMO origin, provided that a causal link is established between the damage and the LMO in question. damage resulting from LMOs, and specifically covers one approach to liability (the administrative approach). As such, domestic law should implement and augment the Supplementary Protocol, and much is left to countries at the national level to determine and implement. Parties to the Supplementary Protocol should put in place substantive laws with regard to liability and redress to address damage from LMOs, and this could include specific civil liability rules and procedures. The Supplementary Protocol is therefore just the beginning in the journey for liability and redress. Remaining gaps will need to be addressed at the national level, or through future work under the Supplementary Protocol, such as that mandated for civil liability and financial security. This could be aided by complementary capacity-building measures, which are already envisaged for the development and/or strengthening of human resources and institutional capacities relating to the implementation of the Supplementary Lim Li Ching and Lim Li Lin are senior researchers with the Third World Network who have been participating actively in the negotiations of the Cartagena Protocol on Biosafety and the Nagoya Kuala Lumpur Supplementary Protocol on Liability and Redress. This understanding is significant as it clarifies that the Supplementary Protocol may apply to damage caused, not only by LMOs, but also by their products, which may be non-living material. In any case, if a Party so wishes, it can include products thereof in its domestic law implementing the Supplementary Conclusions The Supplementary Protocol sets international minimum standards on liability and redress for 24 Paragraph 3(c) of Article 20 of the Cartagena Protocol on Biosafety. 25 Paragraph (i) of Annex I of the Cartagena Protocol on Biosafety. 26 Paragraph 5 of Annex III of the Cartagena Protocol on Biosafety. 6
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